Attorney General Josh Shapiro announced that Citibank will refund $1,063,041 to approximately 7,000 Citi credit card accounts in Pennsylvania to resolve allegations that it illegally overcharged credit card interest.
The settlement was led by Pennsylvania and achieved in partnership with the attorneys general of Iowa, Massachusetts, New Jersey, and North Carolina.
Citi is paying the five states a total of $4.2 million and approximately 25,000 current and former Citi customers will receive refund checks.
“Citi failed to meet its legal obligation to consumers, and charged thousands of Pennsylvanians for bogus interest payments,†said Attorney General Josh Shapiro. “Today, our office got back more than $1 million for those Pennsylvanians who were overcharged. When banks step out of line, we will hold them accountable.â€
The investigation arose from Citibank’s failure, from February 2011 to August 2017, to properly reevaluate and reduce the annual percentage rate (“APRâ€) for certain consumer credit card accounts as required by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).
For more than six years, Citibank failed to follow the law and lower credit card interest rates for certain consumers who were entitled to reductions in their APR. In addition, the PA Office of Attorney General claims that Citibank’s conduct in connection with the APR reevaluation issues violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law.
The attorneys general will be distributing the settlement to eligible consumers through Epiq Class Action & Claims Solutions, Inc., a settlement administrator. Consumers do not need to take any action to receive their funds, which will be sent as checks to eligible consumers in the middle of 2021. Only those Citi credit card customers who meet certain criteria set by the settling states will receive a refund check.
As explained in detail in a 2018 Consent Order between Citibank and the Consumer Financial Protection Bureau (CFPB), the CARD Act requires credit card issuing banks to perform a “look back†at least every six months to review whether, for accounts where the bank has increased the APR due to credit risk or other factors, the factors that prompted the increase have changed.
When indicated by the look back review, the CARD Act requires the bank to reduce the account’s APR. The CFPB’s Consent Order alleges that Citibank failed to properly implement the CARD Act’s look back requirements from 2011 to 2017.
"As Citi previously disclosed in early 2018, we self-identified, self-reported and corrected issues with APR rate re-evaluations as required by Regulation Z of the CARD Act," Citi said.
"When we reviewed our implementation of the regulation, we identified a small portion of credit card accounts that received impermissible rate increases.
"We resolved the matter with the Consumer Financial Protection Bureau, refunded customers, and completed a comprehensive internal review to ensure our practices meet regulatory requirements.
"Today, Citi has voluntarily signed an agreement with five states totaling $4.2 million in which the states will provide certain consumers with payments related to this legacy issue.
"The states will administer and distribute payments at their discretion. While Citi denies violating the states’ consumer protection laws, we are pleased to put this matter behind us," the company said. ■